It’s been a very quiet night of trade on the final trading day of the month with most majors trapped in narrow ranges through Asian and early European trade. With no major news on the docket and the summer doldrum season fully upon us volatility may remain subdued for the rest of the day.

The one exception in today’s session was the kiwi which continued to drift lower throughout the night in the wake of miserable business sentiment numbers from ANZ. The ANZ Business Confidence report saw a very sharp drop to -15.3 versus -2.3. This was the worst result since 2009 and only the third negative reading in 6 years.

The steep decline in business sentiment suggests that conditions in New Zealand economy have deteriorated markedly as demand for milk -the country for the country’s principal export – has declined by nearly 65% this year. According to Bloomberg “Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, slashed its payment to New Zealand farmers to NZ$4.40 ($2.92) a kilogram of milk solids in the season ended May 31, from NZ$8.40 a year earlier.”

Today dour sentiment figures almost assure another rate cut from RBNZ when it meets next in September. The kiwi has been one of the worst performing currencies in the advanced industrialized world this year and the downtrend shows no signs of stopping unless demand from China stabilizes.

The slowdown in China has had massive knock on effects on all the commdollar currencies as the country’s demand for both hard and soft commodities has moderated considerably along with its once torrid growth. With kiwi, Aussie and loonie all trading near multi year lows, the most important release this week will actually happen on the week-end.

Tomorrow China will release its PMI Manufacturing data with consensus view calling for 50.2 print just as the month before. If Chinese Manufacturing can remain above the critical 50 boom/bust level, the commdollar currencies could breath a sigh of relief and stage a possible short covering rally at the start of next week. However if the data shows that Chinese industry has now slipped into a contraction, the commdollar can be in for another round of pain when trading resumes next week.